Investor Perception of CEO Power Concentration in Emerging Economies

Abstract

This paper examines investor perception of CEO power concentration, particularly CEO duality, in emerging market contexts. Building on Ogundipe's (2019) empirical rejection of universal anti-duality assumptions, this study synthesizes recent literature to demonstrate that investor responses to CEO power concentration are fundamentally context-dependent. Through behavioral finance, strategic management, and organizational studies perspectives, the analysis reveals that CEO duality can be perceived as efficiency-enhancing under specific regulatory and informational conditions in emerging markets. The paper examines how institutional trust, board independence, ownership structure, and cross-cultural differences moderate investor perceptions and market reactions. Evidence from Pakistan, Malaysia, India, Vietnam, Ghana, Kenya, Indonesia, Palestine, Bangladesh, Egypt, and Iraq demonstrates heterogeneous market responses, with some contexts showing positive valuation effects while others exhibit negative market discounts. The findings challenge prescriptive, one-size-fits-all governance recommendations and highlight the importance of institutional quality, regulatory environment, and cultural norms in shaping investor psychology regarding concentrated executive power. This research contributes to corporate governance theory by demonstrating that governance effectiveness depends on enacted oversight mechanisms rather than formal structural declarations, with significant implications for policymakers, investors, and corporate boards in emerging economies.